mac chpt 2

Select all that apply Choose those characteristics that best describe a command system. Multiple select question. A central planning board makes all economic decisions concerning resources. The government owns most property resources. Firms produce according to the demands of consumers. The division of output between capital and consumer goods is decided by market forces.

A central planning board makes all economic decisions concerning resources. The government owns most property resources.

Which of the following is characterized by the private ownership of resources and the use of markets to coordinate and direct economic activity? Multiple choice question. An economic system A democratic system A market system A command system

A market system

Select all that apply Which of the following describe the concept of laissez-faire? Multiple select question. A market system in which the role of government is to correct market failures A market system in which the role of government is limited to protecting private property A market system in which only mutually beneficial economic transactions are completed A market system in which the role of government is unlimited

A market system in which the role of government is limited to protecting private property A market system in which only mutually beneficial economic transactions are completed

Which of the following is true of a market system? Multiple choice question. A market system is a combination of centralized government initiatives and decentralized actions taken by firms. A market system discourages innovation. A market system is characterized by government ownership of sources of production. A market system discourages competition.

A market system is a combination of centralized government initiatives and decentralized actions taken by firms.

(one word) is the use of resources by an individual, firm, region, or nation to produce one or a few goods or services rather than the entire range of goods and services.

Blank 1: Specialization or Specialize

Freedom of ensures that entrepreneurs and private businesses are free to obtain and use economic resources to produce their choice of goods and services.

Blank 1: enterprise

In a market system, firm are subject to business risk.

Blank 1: owners or entrepreneurs

The five questions that every society must address reflect the reality of (scarce/infinite) resources in a world of (limited/unlimited) wants.

Blank 1: scarce, limited, or finite Blank 2: unlimited, insatiable, limitless, infinite, or endless

A proprietorship is a business owned and managed by a single person.

Blank 1: sole, single, or solitary

Which of the following would be an example of the system accommodating change? Multiple choice question. Buyers want less juice and milk. Producers increase spending on juice and milk. Buyers want less juice and more milk. Producers increase spending only on juice. Buyers want the same amount of juice and milk. Producers increase spending on juice and milk. Buyers want more juice and less milk. Producers increase spending only on juice.

Buyers want more juice and less milk. Producers increase spending only on juice.

How does the market system develop methods for analyzing and managing risk? Multiple choice question. By implementing a command system that allows for government control and oversight of firms By tracking changes in consumer tastes over the course of several years By presenting businesses with the economic consequences of their decisions By conducting surveys to learn more about consumer tastes and buying habits

By presenting businesses with the economic consequences of their decisions

Select all that apply How does the profit system guide entrepreneurs? Multiple select question. By eliminating the financial consequences of decisions By providing methods for assessing and managing risk By rewarding them with profits when they choose wisely By punishing them with losses when they choose poorly

By rewarding them with profits when they choose wisely By punishing them with losses when they choose poorly

Select all that apply Which of the following best describe how goods and services should be produced? Multiple select question. By using cost-maximizing production methods By utilizing the right mix of labor and capital By utilizing a level of labor equal to the level of capital available to a firm By locating production facilities optimally to hold down production and transportation expenses

By utilizing the right mix of labor and capital By locating production facilities optimally to hold down production and transportation expenses

Select all that apply Which of the following collectively direct resources to industries that are meeting consumer wants and away from industries that are not meeting consumer wants? Multiple select question. Competition among firms Consumer sovereignty Dollar votes High production costs

Consumer sovereignty Dollar votes

Select all that apply Which of the following collectively direct resources to industries that are meeting consumer wants and away from industries that are not meeting consumer wants? Multiple select question. High production costs Consumer sovereignty Dollar votes Competition among firms

Consumer sovereignty Dollar votes

Which of the following is the reason why every society needs to develop an economic system? Multiple choice question. Every society has unlimited resources but limited wants. Every society faces the economizing problem. Every society is destined to flourish and grow. Every society has limited resources and wants.

Every society faces the economizing problem.

True or false: Money complicates exchange or trade. True false

False

True or false: The resource market is the place where resources or the services of households are produced.

False

Which of the following ensures that entrepreneurs and private businesses are free to obtain and use economic resources to produce their choice of goods and services? Multiple choice question. Self-interest Freedom of enterprise Competition Property rights Freedom of choice

Freedom of enterprise

Select all that apply Which of the following does competition require? Multiple select question. Freedom of sellers and buyers to enter or leave markets Two or more buyers and two or more sellers acting dependently in a particular market Two or more buyers and two or more sellers acting independently in a particular market Mutually exclusive economic transactions

Freedom of sellers and buyers to enter or leave markets Two or more buyers and two or more sellers acting independently in a particular market

Select all that apply Which of the following are found in the product market? Multiple select question. Goods Services Capital Land Labor

Goods Services

Who owns most property resources in a command system? Multiple choice question. Society Firms Government Individuals

Government

Select all that apply Which of the following occur in the resource market? Multiple select question. Households provide economic resources directly as workers or entrepreneurs. Businesses buy resources from households because they are necessary for producing goods and services. Households purchase goods and services from firms. Households sell resources and businesses buy them.

Households provide economic resources directly as workers or entrepreneurs. Businesses buy resources from households because they are necessary for producing goods and services. Households sell resources and businesses buy them.

Select all that apply Which of the following were economic problems faced by the former Soviet Union, Eastern Europe, and China prior to its market reforms? Multiple select question. Incentive problem Dysfunctional capital markets Coordination problem Diminishing returns problem

Incentive problem Coordination problem

Select all that apply Which statements about the profit system are true? Multiple select question. It provides financial incentive for taking large risks. It exposes employees to business risk. It encourages entrepreneurs to make prudent decisions. It is actually a profit and loss system.

It encourages entrepreneurs to make prudent decisions. It is actually a profit and loss system.

An active, but limited, government is characteristic of which type of economic system in modern advanced industrial economies? Multiple choice question. Centrally planned system Command system Modern market system Price-controlled system

Modern market system

Select all that apply If increasing numbers of consumers decide to purchase organically farmed fruit rather than conventionally farmed fruit, how is the market likely to respond? Multiple select question. Organic fruit profits will rise. Conventional fruit profits will fall. Organic fruit prices will fall. Conventional fruit prices will rise.

Organic fruit profits will rise. Conventional fruit profits will fall.

Select all that apply The market system attracts inputs and focuses owners' attention on risk management by restricting business risk to which two groups? Multiple select question. Owners Consumers Investors The government

Owners Investors

______ ownership of capital gives capitalism its name. Multiple choice question. Central board Government Private Public

Private

Select all that apply Which of the following ensure that private individuals and businesses are able to utilize property as they wish? Multiple select question. Public domain The right of public property The ability to negotiate legally binding contracts The ability to negotiate contracts that are not legally binding The right of private property

The ability to negotiate legally binding contracts The right of private property

Select all that apply Which of the following correctly states why advanced technology and capital goods are important? (Check all that apply.) Multiple select question. The most productive methods are often the least efficient. The new technology can enhance the productivity of workers. The most direct methods of producing a good or service are often the least efficient. The most direct methods of producing a good or service are often the most efficient.

The new technology can enhance the productivity of workers. The most direct methods of producing a good or service are often the least efficient.

Select all that apply Which of the following statements describe who will get the goods and services produced in a market economy? Multiple select question. Those who have sufficient income and want to spend money on a particular good Those who are willing and able to pay for the goods and services Those who the government says should receive the goods and services Those who are willing to wait for the goods and services

Those who have sufficient income and want to spend money on a particular good Those who are willing and able to pay for the goods and services

True or false: In a market system, consumers exercise consumer sovereignty, which is crucial in determining the types and quantities of goods purchased. Multiple choice question. True False

True

Which of the following is the most efficient method of production? Multiple choice question. Exclusive use of technology as it is often changing and results in continuous creative destruction Exclusive use of capital, but only when labor exceeds the cost of capital Exclusive use of labor, only when capital and technology exceed the cost of labor Using a combination of labor, capital and technology

Using a combination of labor, capital and technology

Select all that apply Identify the five fundamental questions that all economies, whether market or command, must address. Multiple select question. Who will get the goods and services? What goods and services will be produced? How will the goods and services be produced? How will the system promote progress? How will the system accommodate change? How will the prices of goods and services be determined? What will be the price of goods and services produced?

Who will get the goods and services? What goods and services will be produced? How will the goods and services be produced? How will the system promote progress? How will the system accommodate change?

Modern market economies usually have a(n) ______. Multiple choice question. command system active and extensive government passive government active, but limited, government

active, but limited, government

Technological advancements, such as the personal computer and medical discoveries, are primarily driven by the profit motive. However, such advancements eventually promote the public or social interest as though they are guided by _____. Multiple choice question. unlimited greed an invisible hand managed incentives the quest of efficiency

an invisible hand

For a market system to maximize its potential, it must develop methods for ______. Multiple choice question. rejecting consumer demands circumventing government regulations assessing and managing risk collaborating with competitors

assessing and managing risk

The two major benefits that arise from the market system's restriction of business risk to owners and investors are Multiple choice question. attracting inputs and focusing attention. attracting outputs and diversifying attention. attracting inputs and diversifying attention. attracting outputs and focusing attention.

attracting inputs and focusing attention.

Two or more buyers and two or more sellers acting independently in a particular product market with the freedom to enter and leave the market best describes ______. Multiple choice question. freedom of enterprise a monopoly competition self-interest

competition

In the circular flow model, the market economy creates ______. Multiple choice question. and expands the available resources needed for the production of goods and services a constant flow of money between households and businesses a flow of goods and services among households continuous flows of goods and services, resources, and money

continuous flows of goods and services, resources, and money

Select all that apply The command economies of the former Soviet Union and of Eastern Europe failed due to: Multiple select question. poorly educated and trained labor force. lack of investment. coordination problems. incentive problems.

coordination problems. incentive problems.

In recent years, new MP3 and digital technologies have replaced compact disks. This is an example of ______. Multiple choice question. capital accumulation central planning creative destruction technological destruction

creative destruction

The creation of new products and production methods that completely destroys the market positions of firms that are wedded to existing products and older ways of doing business is called _____. Multiple choice question. creative destruction central planning capital deterioration capital accumulation

creative destruction

A(n) ______ system is a particular set of institutional arrangements and a coordinating mechanism that responds to the economizing problem. Multiple choice question. democratic political economic judicial

economic

In the circular flow model, households sell resources to and buy products from _______. Multiple choice question.

firms

In the circular flow model, households sell resources to and buy products from _______. Multiple choice question. the government consumers firms other households

firms

In the circular flow model ______. Multiple choice question. households receive income through the product market households spend their income in the product market firms supply resources to households households produce goods

households spend their income in the product market

The term "laissez-faire" refers to Multiple choice question. limiting the government's interference in the economy. allowing the government to significantly interfere in the economy. the government as the dominant force in the economy. mixed market or mixed capitalism.

limiting the government's interference in the economy.

In a _______ system, people act in their own self-interest. Multiple choice question. populist market centrally-planned socialist

market

Under the market system, ______ coordinate the decisions made by households and businesses. Multiple choice question. price floors and price ceilings markets and prices utility and competition the public sector and the private sector

markets and prices

Money performs several functions, but first and foremost it is a ______. Multiple choice question. necessary evil bartered good market resource medium of exchange

medium of exchange

What is the coordinating mechanism in a market system? Multiple choice question. prices governing board competition supply

prices

The "invisible hand" guides firms and resource suppliers to promote ______ even as they seek to further their own interests. Multiple choice question. foreign interests household interests only government interests public or social interests

public or social interests

A firm's owners are called ______ because they are only paid after employees, suppliers, and lenders have been paid. Multiple choice question. residual claimants entrepreneurs lien holders capital accumulators

residual claimants

Select all that apply Which of the following are components of the circular flow model? Multiple select question. component market resource market product market households businesses

resource market product market households businesses

When every economic unit in a society attempts to achieve its own particular goal, usually requiring delivering something of value to others, it is referred to as ______. Multiple choice question. freedom of choice trade greed self-interest

self-interest

In the circular flow model, households ______ resources and ______ products. Multiple choice question. sell; buy buy; sell buy; buy sell; sell

sell; buy

A business owned and managed by a single person is called a(n) ______. Multiple choice question. corporation sole proprietorship S corporation monopoly

sole proprietorship

The goods and services produced by an economic unit through ______ can be exchanged for a full range of desired products produced by other economic units. Multiple choice question. capital intensiveness competition specialization labor intensiveness

specialization

Goods and services are produced efficiently when production is organized in combinations and ways ______. Multiple choice question. that minimize the cost per unit of output where the costs per unit of output are equal to the capital investment that averages the cost per unit of output

that minimize the cost per unit of output

In a market economy, goods and services are distributed ______. Multiple choice question. to the government for redistribution to the people who can afford to pay for them to consumers on the basis of their ability and willingness to pay the existing market price according to the needs of society as determined by the government equally among all consumers

to consumers on the basis of their ability and willingness to pay the existing market price